Drilling for Black Gold with Standard Oil Bulletin, May 1929

by Paul R. Spitzzeri

The Homestead’s interpretation of regional history through the lives of the Workman and Temple families during our focus period of 1830-1930 entails many aspects of greater Los Angeles and its transformation over that century.  Among many economic elements involving members of the families is the oil industry, one of several (oranges, film, and tourism are others) that helped define the region’s identity, locally and outside the area.

F.P.F. Temple was among the early oil prospectors in Los Angeles, working claims in what, in the early to mid 1870s, was known as the San Fernando field.  This was in the hills in modern Santa Clarita along the west side of today’s Interstate 5.  Temple even had some modest success with producing some crude from his wells and built the first steam-powered oil refinery, small as it was, in California.

Unfortunately, Temple’s efforts in petroleum mining came to an abrupt end in 1875-76 when the state economy plummeted due to the bursting of a silver mining speculation bubble in Virginia City, Nevada that rocked the banking world of San Francisco.  The telegraph, in late 1875, sent the news south to Los Angeles and the bank of Temple and Workman, heavily leveraged with depositors funds tied up with many development projects (including the oil wells at San Fernando) and with insufficient cash reserves, failed early in 1876.

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The images here are from the May 1929 issue, in the Homestead’s collection, of Standard Oil Bulletin, the monthly magazine of The Standard Oil Company of California, which had a lease with the Temple family at the Montebello oil field.

Months after the bank went belly up, the Star Oil Company, working very close to Temple’s wells, hit a gusher and California’s oil industry was basically inaugurated.  Ironically, among the land lost by Temple and his father-in-law and bank partner William Workman to Elias J. “Lucky” Baldwin, who’d loaned the stricken bank funds to reopen and then foreclosed three-and-a-half years later, were largely barren and considered worthless lands in the Montebello Hills and what became known as the Baldwin Hills near today’s Culver City.

Just about four decades later, Temple’s son, Walter, was the beneficiary of an astounding stroke of good fortune.  He acquired from Baldwin’s estate (the tycoon having died three years earlier) in October 1912 about 60 acres of land formerly owned by his father at the northeastern edge of the Montebello hills and some flat land on the west bank of the Rio Hondo (the old San Gabriel River).

Adding to the strangeness of the story, Walter was unable to pay for the land outright, so he arranged a payment plan with Baldwin’s nephew, business manager and executor, Hiram Unruh.  Perhaps Unruh felt the property was of insignificant value, but, in April 1914, Temple’s son, Thomas, then nine years old, made a stunning discovery of oil on the hillside his father christened “Temple Heights.”

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The following year, a lease was arranged with Standard Oil Company of California, one of the largest oil-producing firms in the state.  Standard also made a deal with Unruh for the remainder of the Montebello Hills property which he oversaw for Baldwin’s daughters and heirs, Anita and Clara.  In late 1916, a test well on the Baldwin property was successful.

Shortly afterward, the first well on the Temple lease was drilled and was successfully brought into production at the end of June 1917, just after America entered the First World War.  Within several years, two dozen or so wells were drilled on the Temple lease, with several gushers.  The Temples, receiving an eighth royalty, were suddenly propelled to significant levels of wealth.

Walter Temple became an oil producer, working with some partners and investing in other companies as well as founding the Walter P. Temple Oil Company.   He had projects in Alaska, Texas, Mexico and several areas of Southern California, including Huntington Beach, Whittier, Signal Hills and Ventura.

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Unfortunately, none of his individual projects ever came near to the roaring success of the Montebello Hills field and, even more troubling, production at that field peaked quickly and dropped dramatically.  As Temple poured money into real estate development and his magnificent mansion, La Casa Nueva, at the Homestead, his oil revenue was not keeping pace and his financial problems worsened so that, by the Great Depression, he was, to borrow an oil industry term, “tapped out.”

Standard, created as Pacific Coast Oil Company in 1879, later became a subsidiary of the massive Standard Oil Company built by John D. Rockefeller but broken up in anti-trust legislation in 1911.  It spun off as Standard Oil Company (California) and, in 1926, adopted the moniker of Standard Oil Company of California.

The firm was a powerful player in the state’s booming oil industry for decades and it long used Chevron as a brand name for gasoline before becoming Chevron Corporation in the late 1970s.  In the 1980s, the company merged with Gulf Oil and, in 2005, it acquired Unocal, which started in the 1880s in Santa Paula in Ventura County as Union Oil Company.  The firm had sales in 2018 of nearly $160 billion and net income just shy of $15 billion.   With news just released that levels of carbon dioxide are at the highest in some 3 million years, the future of oil will continue to be heavily debated and contested.

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Tonight’s post in the “Drilling for Black Gold” series highlights, from the Homestead’s collection, the May 1929 issue of Standard Oil Bulletin, a monthly publication launched sixteen years before for the firm’s patrons, employees and stockholders.  The company made sure to state in the publication information that its aim “is to furnish first hand and authoritatively . . . facts [italics included] concerning the Company’s business and methods.”

The editorial on the first page will be all-too-familiar to we Californians as it concerned “Enormous Gasoline Taxation.”  The piece observed that, since the introduction of the levy about a decade before, rates rose from a one-cent per gallon one to up to six cents, as was collected South Carolina, while Illinois was, in the summer, to be the last state to introduce a gas tax.

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Moreover, the article continued, the total collected sum in 1928 was over $300 million and that, with the Land of Lincoln joining New York and Massachusetts as the newest states to have the levy, it was anticipated that $450 million would be collected in 1929.  Not mincing words, the editorial declared:

The gasoline tax is distasteful to the oil industry of the United States.  It amounts to a sales tax on its principal commodity, and a very high one.  Nor do oil companies relish being tax-collectors.

Additionally, the Bulletin stated that, while the intention of the tax was for road purposes, “in thirteen states portions of the 1928 tax were used for other purposes,” which were unspecified and styled by the magazine as “general public purposes” and representing “no logic at all.”

What the editorial suggested was that “permanent public improvements should be financed through bond issues” so that “future beneficiaries would pay their share.”  Left unsaid was the question of paying the interest on those bonds, an issue that is of great significant to us in California ninety years later.

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The feature article in the publication concerned the prevalence of billboards along roadways and was titled “Scenic or Sign-Ic Highways.”  Regarding the burgeoning phenomenon of outdoor advertising, the piece averred that the practice “has been impeached,” a timely word these days, and that it “is now on trial, as it were, in the court of public opinion.”

A common complaint was that billboards “cut off the view of the scenery,” a real problem on the West Coast where its “scenic attractions are of tremendous value, considered in relation to the tourist business.”  Obviously, it was important for the Bulletin to add that tourism in Southern California generated $160 million in revenue a year, making that industry second to . . . wait for it . . . oil.

So, the core problem was that

to permit the defacement and uglification [is that a word?] of these highways is to disgust visitors and drive them away, which most certainly is “bad business.”  Any practice which arouses the anger, contempt, or resentment of motorists on the great annual pilgrimage from all parts of the country is detrimental to the state at large.

All those signs, some “tacked to trees and fences,” were “a depressing influence on the tourist, and usually rouses his loathing and antagonism.”  The bottom line: “Highway advertising is running riot throughout the land.”

Standard not only decried the practice, but did so, the piece continued because “with this Company it is a plain matter of business, not of sentiment.”  That is, Standard “is for more motorists, more pleasure in motoring, and for better-looking highways.”  To that end, it abandoned roadside advertising five years before and a photo of a Standard sign being dismantled and destroyed was shown with numerous examples of noxious billboards, with the content disguised so as not to offend the advertiser (though the article would seem to have more than done that!)

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A third article of note was titled “Oil to the Rescue” and discussed Standard products used for oil-fueled heaters to protect crops during period of frost.  Here, too, is a timely reference: “As the whole world knows, the spring of 1929 has been a freak spring,” with wide-ranging estimates of from a quarter to three-quarters of some deciduous fruit crops “nipped in the bud,” especially peaches and apricots.

Standard’s “Fuel Oil 27 Plus” was being manufactured at company refineries in Bakersfield and the chief one at Richmond, north of Berkeley, and delivered throughout the western states to assist orchard owners in protecting their crops.  It did take exception to the fact “that ‘smudging’ and ‘smudge oil’ are misleading terms” with the company’s product because it did not generate smoke, but heat.

Each month’s issue provided statistics comprising “Oil Field News” in production and development in the state’s major fields, crude prices and the stock, or inventory, of crude, gasoline, distillates and other stock.  As reported by the Pacific Coast office of the American Petroleum Institute, March production statistics showed that the Long Beach field was supreme among California fields at not far under 6 million barrels of product, while Santa Fe Springs was a close second at nearly 5.3 million.  A distant third was Midway-Sunset in the Central Valley at 2.2 million.

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Unfortunately for Walter P. Temple, his Montebello lease was part of a field that produced only 340,000 barrels from just over 170 active wells, making the field just the fifteenth highest producer in the state, a far cry from its glory days in the late teens and early twenties.

As for crude oil prices, they varied widely based on the gravity, so that the lowest of 14 to 15 degrees generated 70 cents per barrel of 42 gallons, while the exceptionally rare gravity level of 42 to 43 fetched up to $1.95.  The Kettleman Hills field in the Central Valley actually had oil of a gravity of 55 degrees that brought $1.65 per barrel.  At Montebello, the gravity range was from 14 to 31 with prices going from 70 cents to $1.16.

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With respect to stocks of product, heavy crude above 20 degrees totaled just a bit under 102 million barrels, an increase of 1.2 million barrels from February and over 6 million more than March 1928.  There was a substantial growth in the production of refinable crude of 20 degrees or lighter of over 25 million barrels, an increase of 2 million from February to March and nearly 5 million from the prior year.

Gasoline stocks rose from 12.3 to 13.3 million barrels, but dropped 1.4 million from March 1928, though there were increases in distillates a modest decline in other stocks, but overall growth from the prior year.  Total production was up 4 million barrels from February and over 10 million from the previous March.

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Publications like Standard Oil Bulletin are valuable research material for editorials expressing the view of oil companies, statistics on production and development of oil in the state, and general articles relating to company business and output.  The few ads found in this issue can also be of interest, as one, promoting “Oronite Fly Spray” asks the women targeted in the ad, “Why Not Be Modern?” and exchange a fly swatter for the up-to-date sprayer.  Naturally, it was promised that the spray was “harmless to human beings and fabrics” and was sure to be effective so that flies “are dead to stay dead.”

 

 

 

 

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